2
- 1Spain: An attractive country for investment
- 2Setting up a business in Spain
- 3 Tax System
- 4 Investment aid and incentives in Spain
- 5 Labor and social security regulations
- 6 Intellectual property law
- 7Legal framework and tax implications of e-commerce in Spain
- AI Annex I Company and Commercial Law
- AIIAnnex II The Spanish financial system
- AIIIAnnex IIIAccounting and audit issues
- Español
- English

- Introduction
- Different ways of doing business in Spain
- Tax Identification Number (N.I.F.) and Foreigner Identity Number (N.I.E.)
- N.I.E. for individuals who are to be shareholders or directors of companies resident in Spain, tax and legal representatives of a branch in Spain or limited liability entrepreneurs
- N.I.F. for legal entities that are to be shareholders or directors of companies resident in Spain or owners of branches in Spain
- Provisional and definitive N.I.F. of the company resident in Spain that is to be set up
- Formation of a company
- Limited liability entrepreneur
- Opening of a branch
- Other alternatives for operating in Spain
- Other alternatives for investing in Spain
- Dispute resolution
- Appendix I - Table summarizing the tax treatment given to the various ways of investing in Spain
6. Opening of a branch
6.3. Calculation of Spanish corporate income tax
Below is a simple example of how Spanish corporate income tax and nonresident income tax is calculated on the profit obtained by a Spanish subsidiary or by the branch in Spain of a foreign company, respectively. (For further information, on these taxes, see section 2.1. of Chapter 3).
Parent company inUE country (1) | Treaty country | Non-treaty country | |
---|---|---|---|
Subsidiary: | |||
Profit of Spanish subsidiary | 100 | 100 | 100 |
Spanish income tax (25%) (2) | 25 | 25 | 25 |
Dividends | 75 | 75 | 75 |
Withholding tax on dividends | – (4) | 7.5 (5) | 14.25 (3) |
Total tax in Spain | 25 | 32.5 | 39.25 |
Branch: | |||
Profit of Spanish branch | 100 | 100 | 100 |
Spanish income tax (25%) (2) | 25 | 25 | 25 |
Profit remitted to the parent company | 75 | 75 | 75 |
Withholding tax | – (4) | – (6) | 14.25 (3) |
Total tax in Spain | 25 | 25 | 39.5 |
(1) Spain has tax treaties in force with all EU countries except Denmark. | |||
(2) The general corporate income tax rate is 25%. | |||
(3) Withholding tax rate = 19%. | |||
(4) Exempt, provided certain conditions are met. | |||
(5) The withholding tax rate on dividends used in this example is 10% (the most common rate in the tax treaties entered into by Spain). | |||
(6) The branch profit tax will apply if provided for in the corresponding tax treaty (e.g. the U.S., Canada and Brazil). |